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J.C. Penney Co. reported a narrower loss for its second quarter that beat Wall Street
expectations.

The beleaguered department-store operator also said yesterday that sales rose 6 percent at
established locations during the period, the third consecutive quarter of growth.

The results offer some encouraging signs that Penney is recovering from a botched transformation
plan by former CEO Ron Johnson that resulted in massive losses and plunging sales. Johnson, the
mastermind behind Apple’s retail concept, was ousted in April 2013 after 17 months on the job. The
board brought back Mike Ullman, who had been at the helm for seven years, to turn around
Penney.

Ullman is trying to win back shoppers by restoring sales events and basic merchandise that the
company ditched under Johnson’s tenure — discontinuing some of the new, trendy brands such as
William Rast and Joe by Joseph Abboud and bringing back store labels. Penney also increased
markdowns to get rid of the excess inventory.

While it attempts to revive sales, Penney is also focusing on cutting costs. In January, it
announced it was cutting 2,000 jobs and shuttering 33 stores.

But the company’s results show that it needs to increase how much profit it makes on each item
and do more to bring back customers.

Penney, based in Plano, Texas, said it lost $172 million, or 56 cents per share, during the
period. Excluding one-time items, it lost 75 cents per share. That wasn’t as bad as the loss of 98
cents per share analysts expected, according to Zacks Investment Research.

Nordstrom also said yesterday that it will spend $350 million to purchase Trunk Club, a
personalized online shopping service for men, as it seeks to expand its portion of the fast-growing
turf of Internet retail.

A portion of the money is conditioned on retaining Trunk Club executives and will vest in the
future. The deal also includes a long-term incentive plan of up to $100 million, and will allow
Trunk Club to operate as a stand-alone unit. The acquisition was announced last month.

Wal-Mart

The world’s largest retailer eked out a 0.6 percent increase in second-quarter profit, dragged
down by a weak U.S. business. A key revenue measure was flat in its U.S. discount stores, though it
reversed five straight quarters of declines. Meanwhile, the number of customers has now fallen
seven quarters in a row.

The results show the continued challenges facing Wal-Mart’s new management team. Doug McMillon,
who was head of the company’s international division, took over the company as CEO on Feb. 1.

Last month, he named Greg Foran, who was the CEO of Wal-Mart’s China business as the head of
Wal-Mart’s U.S. discount business, which accounts for 60 percent of the company’s revenue. Foran,
who started his new job this month, replaced Bill Simon, who had held the position since 2010.

The Bentonville, Ark., company is facing challenges from a slowly recovering economy and fierce
competition from the likes of online king Amazon.com, dollar stores and grocers. It’s also dealing
with a shift among shoppers seeking the convenience of small stores or buying on their mobile
devices and PCs.

Wal-Mart’s low-income shoppers, who on average make $45,000 a year, were squeezed by the
recession that began at the end of 2007 and have struggled to recover since it ended in 2009. While
the job and housing markets are rebounding, Wal-Mart’s low-income shoppers have not benefited and
continue to struggle to stretch their money between paychecks.

The company reported net income of $4.09 billion, or $1.26 per share, compared with $4.07
billion, or $1.24 per share, in the same quarter a year ago.

Earnings, adjusted to account for discontinued operations, were $1.21 per share. The average
estimate of analysts surveyed by Zacks Investment Research was for earnings of $1.21 per share.

The company said revenue rose roughly 3 percent, to $119.34 billion, from $116.1 billion in the
same quarter a year earlier. Analysts expected $119.06 billion, according to Zacks.

In the U.S., revenue at stores open at least a year was unchanged from a year ago, including
flat sales at Sam’s Clubs.

Net sales increased 2.7 percent at the Wal-Mart U.S. discount business, while rising 3.1 percent
in its international business and 2.3 percent at Sam’s Clubs.

Wal-Mart said it now expects earnings per share for the year to be in the range of $4.90 to
$5.15 per share. That’s down from its previous guidance of $5.10 to $5.45 per share.